The cryptocurrency trading environment in South Korea is currently facing a challenging period, with declining trading volumes significantly threatening the earnings of domestic crypto exchanges. But here's where it gets controversial: many industry insiders are asking whether this slump signals the start of a prolonged crypto winter or if it’s just a temporary market correction. The core issue revolves around how an abrupt market downturn can impact revenue streams heavily dependent on trading activity.
To understand the situation better, let’s look at some recent financial disclosures filed with South Korea’s Financial Supervisory Service. Dunamu, which operates the popular Upbit platform, reported an impressive operating profit of 235.3 billion won (approximately $161.7 million), representing a 180% increase compared to the previous year. Its revenue soared by 104% to 385.9 billion won, and net income quadrupled to 239 billion won. Similarly, Bithumb experienced a remarkable turnaround, with operating profits nearly eight times higher at 70.1 billion won, revenue climbing 184% to 196 billion won, and net income skyrocket to 105.4 billion won—an astonishing 34-fold increase.
Both exchanges attributed these strong performances to a rebound in digital asset prices and a surge in trading activities, driven by positive market sentiment fueled by progress in U.S. legislative measures like the approval of the GENIUS Act, an Ethereum rally, and expectations of impending Federal Reserve interest rate cuts.
However, the enthusiasm has since cooled. Key market indicators reveal a stark shift in sentiment. For instance, Bitcoin’s price dropped below $95,000 on Saturday, marking its lowest point in half a year—about 25% down from its October 6 peak of approximately $126,210. Currently, the market is displaying signs of extreme fear, according to coin-tracking platforms like CoinMarketCap.
Several factors are contributing to this negative sentiment. Rising trade tensions between the U.S. and China add uncertainty, while hopes for a Federal Reserve rate cut in the near future are waning. Additionally, a recent Ethereum hack resulting in a loss of around $100 million has shaken investor confidence. These issues have led many to question whether we are entering a new crypto winter—a prolonged period of downturns and reduced trading activity.
This decline in activity is evident in trading volumes. CoinGecko reports that the average daily trading volume on Korea’s two leading exchanges, Upbit and Bithumb, dropped to just $1.88 billion from November 1 to the recent week—its lowest point this year. For context, trading volume peaked at $7.8 billion in January, fell to about $2.2 billion in June, and has hovered around $3 to $4 billion in recent months.
This slowdown poses a serious threat to the core revenue model of these exchanges, since nearly all their income (98.2% for Dunamu and 98.3% for Bithumb) comes from trading fees. Recognizing this risk, both platforms are actively trying to list new cryptocurrencies to attract investor interest. Data from the digital asset analytics platform APYWA indicates that from January 1 to the most recent week, South Korea’s top five crypto exchanges—Upbit, Bithumb, Coinone, Korbit, and GOPAX—listed a total of 391 new tokens, showing a 47% increase compared to all of 2024. This surge in new listings has been particularly notable in the latter half of the year.
Despite these efforts, overall trading volumes remain subdued as the market remains sideways—highlighting the ongoing difficulties in maintaining strong revenue streams. An industry observer pointed out that, without diversified income sources, exchanges will continue to be at the mercy of volatile market conditions. While some see the gradual approval of corporate participation in the crypto sector as a positive step, many argue that long-term sustainability depends heavily on regulatory reforms that enable broader business diversification.
And this is the part most people miss: Are these short-term measures enough to ensure the industry's survival amid persistent market volatility? Or are we on the brink of an entirely new phase—one where the focus shifts from trading volumes to sustainable business models? What are your thoughts—do exchanges need to rethink their strategies now, or is this just a temporary lull? Feel free to share your opinion in the comments below.
